Chapter - Five: Marketing Strategies ofAsian Paints.

CHAPTER - FIVE
MARKETING STRATEGIES OF ASIAN PAINTS.

INTRODUCTION

The fifth chapter of the study is very important phase of the

thesis as it discusses very important issue of the study. This
chapter is concerned with marketing and distribution strategies of
Asian Paints. Asian Paints is the number one company of paints
in our country. It may be called leader company in the paints
market. Every user whether domestic, urban, rural or industrial
knows well about Asian Paints. The painters, the workers and the
contractors, first of all want Asian Paints and any other paint
afterward. This is because of distinct and unique marketing
strategies of Asian Paints. The researcher has obviously
discussed- different marketing strategies of Asian Paints
categorically in this chapter.

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5.1 MARKET SEGMENTATION AND MARKET

TARGETING STRATEGIES OF AP.

A marketer can rarely satisfy everyone in a market. Not

everyone likes the same soft drink, hotel room, restaurant,
automobile, college, and movie. Therefore, marketers start with
market segmentation. They identify and profile distinct groups of
buyers who might prefer or require varying products and
marketing mixes. Market segments can be identified by
examining demographic, psychographic, and behavioural
differences among buyers. The firm then decides which segments
present the greatest opportunity — those whose needs the firm can
meet in a superior fashion.

For each chosen target market, the firm develops a market

offering. The .offering is positioned in the minds of the target
buyers as delivering some central benefits. For example, Volvo
develops its cars for the target market of buyers for whom
automobile safety is a major concern. Volvo, therefore, positions
its car as the safest a customer can buy.

Traditionally, a “market” was a physical place where buyers

and sellers gathered to exchange goods. Economists now describe

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 Chapter - Five: Marketing Strategies ofAsian Paints.

a market as a collection of buyers and sellers who transact over a

particular product or product class (the housing market or grain
market). But marketers view the sellers as constituting the
industry and the buyers as constituting the market.

Figure shows the relationship between the industry and the

market. Sellers and buyers are connected by four flows. The
sellers send goods and services and communications (ads, direct
mail) to the market; in return they receive money and information
(attitudes, sales data). The inner loop shows an exchange of
r

money for goods and services, the outer loop shows an exchange of
information.®

COMMUNICATION

GOODS/SERVICES
INDUSTRY (A MARKET (A
COLLECTION COLLECTION
OF SELLERS) OF BUYERS)
________________ I
£.... ..... MONEY

INFORMATION

® Kotler, Philip: Marketing Management, Prentice Hall of India, New Delhi, 2005.

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 Chapter Five: Marketins Strategies ofAsian Paints.
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The marketing concept is a business philosophy that

challenges the three business orientations we just discussed. Its
central tenets crystallized in the mid-1950s.

The marketing concept holds that the key to achieving its

organizational goals consists of the company being more effective
than competitors in creating, delivering, and communicating
customer value of its chosen target markets. The marketing
concept has been expressed in many colourful ways:

“Meeting needs profitability.”

“Find wants and fill them.”
“Love the customernot the product.”
“Have it your way.” (Burger King)
“You’re the boss.” (United Airlines)
“Putting people first.” (British Airways)
“Partners for profit.” (Milliken & Company)

Theodore Levitt of Harvard drew a perceptive contrast

between the selling and marketing concepts:

“Selling focuses on the needs of the seller; marketing on the

needs of the buyer. Selling is preoccupied with the seller’s need to
convert bis product into ca«b; marketing with the idea of

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satisfying the needs of the customer by means of the product and

the whole cluster of things associated with creating, delivering
and finally consuming it.”

The marketing strategies rest on four pillars: target market,

customer needs, integrated marketing and profitability. They are
illustrated in figure, where they are contrasted with a selling
orientation.

Target Customer Integrating c™"‘*™Ugh

Market Needs Marketing Satisfaction

FIGURE: THE
MARKETING CONCEPT

The selling concept takes an inside-out perspective. It starts

with an factory, focuses on existing products, and calls for heavy
selling and promoting to produce profitable sales. The marketing
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concept takes an outside-in perspective. It starts with a well-

defined market, focuses on customer needs, coordinates all the
activities that t will affect customers, and produce profits by
satisfying customers.

Asian Paints just launched two new products for the rural
consumer. The products are Utsav enamel and Utsav acrylic
distemper. Both these products are prices so as to compete
against local paint manufacturers. Asian Paints are trying to sell
to the rural consumer is a value-for-money product at his price.
r
Asian Paints focus is to upgrade the rural consumer to a branded
product and we' will use the vehicle of advertising on television as
the medium. Various other promotions are being planned to
penetrate rural India. There is a huge rural market waiting to be
unearthed and this segment is definitely one of our areas to drive
growth for the company.*

5.2 PRODUCT LINE STRATEGIES OF AP.

Companies that fails to develop new products are putting

themselves at great risk. Their existing products are vulnerable
to changing customer needs and tastes, new technologies,

* www.asianpaints.com

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shortened product life cycles, and increased domestic and foreign

competition.

At the same time, new^product development is risky. Texas

Instruments lost $660 million before withdrawing from the home
computer. business, RCA lost $ 500 million on its videodisc
players, Federal Express lost $ 340 million on its Zap mail, Ford
lost $ 250 million on its Edsel, Dupont lost an estimated $ 100
million on a synthetic leather called Corfam, and the British-
French Concorde aircraft will never recover its investment.

To get a feel for how much money can be thrown at a product

that is destined to fail, consider the fate of the smokeless
cigarette.
\

WHY DO NEW PRODUCTS FAIL?

♦ A high-level'executive pushes a favorite idea through in

spite of negative market research findings.
♦ The idea is good, but the market size is overestimated.
♦ The product is not well designed.
♦ The product is incorrectly positioned in the market, not
advertised effectively, or overpriced.
Development costs are higher than expected.

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 Chapter - Five: Marketing Strategies ofAsian Paints.

* Competitors fight back harder than expected.

SEVERAL OTHER FACTORS HIGHER NEW-PROPUCT

DEVELOPMENT

* SHORTAGE OF IMPORTANT IDEAS IN CERTAIN AREAS:

There may be few ways left to improve some basic products
(such as steel, detergents),
* FRAGMENTED MARKETS: Keen competition is leading to
market fragmentation. Companies have to aim their new
products at smaller market segments, and this can mean
lower sales and profits for each product.
* SOCIAL & GOVERNMENTAL CONSTRAINTS: New products
have to satisfy consumer safety and environmental concerns.
Government requirements slow down innovation in drugs,
toys, and some other industries.
* COSTLINESS OF THE DEVELOPMENT PROCESS: A
company typically has to generate many ideas to find one
worthy of development. Furthermore, the company often
faces high R&D, manufacturing, and marketing costs.
* CAPITAL SHORTAGES: Some companies with good ideas
cannot raise the funds needed to research and launch them.

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Asian Paints handle the organizational aspect of new

product development in several ways. The most common are:

* PRODUCT MANAGERS: Asian Paints assign responsibility

for new-product ideas to product managers. In practice, this
system has several faults. Product managers are so busy
managing existing lines that they give little thought to new
products other than line extensions. They also lack the
specific skills and knowledge needed to develop and critique
new products.
NEW PRODUCT MANAGERS: Asian Paints have new
product managers who report to category managers. This
position professionalizes the new-product function.
However, like product managers, new product managers
tend to thinkdn terms of modifications and line extensions
limited to their product market.
* NEW PRODUCT COMMITTEES: Asian Paints have a high-
level management committee charged with reviewing and
approving proposals.
* NEW PRODUCT DEPARTMENTS: Asian Paints often
establish a department headed by a manager who has
substantial authority and access to top management. The
department’s major responsibilities include generating and

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 Chapter - Five; Marketing Strategies ofAsian Paints.

screening new ideas, working with the R&D department,

and carrying out field testing and commercialization. *

5.3 MARKETING COMMUNICATION STRATEGIES

mo
Ur nta •

Marketing Information system is most important of all the

systems of Asian Paints. Asian Paints has well developed
management information system especially marketing
information system. Marketing research strategies of Asian
Paints are also quite stable, informative. The data in Asian
Paints are collected for marketing information system from
different sources and processed systematically for marketing
decision system. The data are collected from internal as-well-as
external sources. There are certain examples of the new products
of different companies.

Marketing is all pervasive. It interacts with the external

environment which is ever changing, dynamic and turbulent. As
we have seen that the marketing has evolved from two ages,
production and selling, it has to adapt itself to the environment by
following a change in its policies, strategies, and tactics.

* www.asianpaints.com

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Liberalisation has ushered an era of competition not seen earlier

in the Indian market. It has brought fruits for the customer in
terms of wider choice, better technology, quality, variety and
competitive prices. For the marketer, it has made the
environment more dynamic and turbulent because of increased
competition on all fronts of marketing.

A spate of new products (cellular phones, printer-cum-fax-

cum-copier, Refrigerator with PN system (preserve nutrition
system), advertising wars (Mint ‘O’ vs. Pepsi, KB vs. Hero Honda,
Microshine vs. Surf Exelmatic, etc.) price wars (PCL vs. others,
rate war, Indian Airlines vs. others etc.), sales promotion (freebies,
exchange offers consumer finance from retailers, etc.) better
application of self-service has led to the booming of cooperative
stores, super stores, large departmental stores, etc, new methods
of distribution via direct marketing (telemarketing, Internet
marketing, multilevel marketing, etc.), has led to sweeping
changes in the methods, tools and principles of marketing.
Marketing research provides a basis for formally acquainting
oneself with the information required to carry out the effect of
changes in the marketing environment.

Marketing information system is the application of the

systems approach to the task of collecting, organising, analysing

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and interpreting marketing information. This means that each

step in the research process must be carefully planned, effectively
co-ordinated with all other related steps so all the steps are
properly integrated and executed, as specified, at the proper time
and in the desired sequence. As shown in Figure, marketing
information system has four sub -systems i.e., internal records,
marketing intelligence, marketing research and analysis of
information] The sub-systems are interdependent and
interrelated so as to meet the requirements of marketing
management. They also have active interface with the marketing
environment. In other words, they exchange information with
target markets, channels, economic, social and political forces in
the external environment.

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Internal records are compiled from information gathered

from sources within the organisation such as accounting
department, production department, customer service
department, sales department, etc. Marketing intelligence is the
information about changes in the marketing environment. This
information helps the marketing department to prepare and
modify marketing plans. Marketing research is designed to collect
and analyse information about the problems faced by the
management. The information gathered from different sources is
processed and analysed with the help of computers to draw
t

conclusions to be used by the marketing managers.’

5.4 PRICING STRATEGIES OF AP.

Pricing policies represents the general framework within

which pricing decisions are taken. It provides guidelines to
carryout pricing strategy. There are five stages in developing the
pricing strategy. Like any other activity strategy formulation
starts pricing with the clear statements of objectives. It is
essential that pricing decisions be integrated with the firm’s
overall marketing program.

’ Chhabra, T.N.: Marketing Management, Dhanpat Rai and Sons, New Delhi, 2005.

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Formulation of marketing strategy is not a one time

phenomenon. It should be flexible that is can be moulded
according to the need of the hour because pricing strategy is the
plan of action to face the challenges of a particular market
situation.

RECOMMENDATIONS OF EFFECTIVE PRICING

DECISION OF ASIAN PAINTS

Establish prices after determining costs, competitive prices

and demand. factors affecting

PRICE DECISIONS

OBJECTIVES CONSUMERS

BROAD PRICE COST

POLICY

PRICE GOVERN
STRATEGY MENT

IMPLEMENT CHANNEL
ATION OF MEMBERS
PRICE
STRATEGY

PRICE COMPETI
ADJUST TION
MENTS

A FRAMEWORK FOR DEVELOPING A

PRICING STRATEGY

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♦ Decide which pricing objectives are to be achieved.

Determine the elasticity of a product’s demand curve.
Anticipate potential pricing problems.
Constantly monitor the company’s pricing program.
Realise that product, place, and promotion decisions also
affect pricing.
Determine the extent to which products have achieved
distinctiveness in the market place.
Attempt to determine which market model is the most
appropriate for specific products.
# Follow a step by step procedures for establishing prices.
Anticipate possible governmental action.

Pricing strategies usually change as the product passes

through its life cycle. The introductory stage is especially
challenging. We can distinguish between pricing a product that
imitates existing products and pricing an innovative product that
is patent protected.

Asian Paints plans to develop an imitative new product faces

a product-positioning, problem. It must decide where to position
the product versus competing products in terms of quality and
price.

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Figure shows four possible positioning strategies.

PRICE
HIGHER LOWER

PREMIUM GOOD
Q HIGHER STRATEGY VALUE
U
A STRATEGY
L
I OVER ECONOMY
T LOWER CHARGING STRATEGY
Y STRATEGY

PRICING QUALITY TRATEGIES

First, the company might decide to use a premium pricing

strategy - producing a high-quality product and charging the
highest price. At the other extreme, it might decide on an
economy pricing strategy — producing a lower quality product but
charging a low price. These strategies can coexist in the same
market as long as the market consists of at least price.

The good-value strategy represents a way to attack the

premium pricer. Its says, “We have high quality, but at a lower
price.” If this really is true, and quality-sensitive buyers believe
the good-value pricer, they will sensibly buy the product and save
money — unless the premium product offers more status or snob
appeal. Using an overcharging strategy, the company overprices

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the product in relation to its quality. In the long run, however,

customers will likely feel “taken.” They will stop buying the
product and will complain to others about it. Thus, this strategy
should be avoided.

Two major pricing decisions that must be made, involve (a)

Determining the specific price to be put on a new product and (b)
Determining how that price should be varied over the product’s
life cycle. In developing a pricing strategy for new products, firm
can use tow approaches:

Skimming approach and

♦ Penetration approach.

# SKIMMIG APPROACH: Many marketers place high price to

skim the market. A skimming price is a high price put on a
new product so that it can generate high initial profits
especially if the new product has no competition. As
competitive products are introduced and as a mass market
develops for the item, the product’s price can be lowered.
The initial high price may create an image of quality and
prestige for the new product and consumers will believe that
they are getting a bargain when the price is lowered.

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♦ PENETRATION APPROACH: Rather than setting a high

initial price to skim small but profitable market segments,
the marketer set a low initial price in order to penetrate the
market quickly and deeply. Penetration pricing relies on low
prices in order to obtain instant acceptance in the market
place and thus it may result in a stronger long range
position of leadership. Profits may not be very attractive at
first because of the low price, but the low price tends to keep
out competition/

5.5 GLOBALISATION STRATEGIES OF AP.

A global economic boom, unprecedented in modern economic

history, is under-way as the drive for efficiency, productivity, and
open, unregulated markets sweep the world. Never before in
American history have U.S business been so deeply involved in
and affected by international global business. Powerful economic,
technological, industrial, political, and demographic forces are
converging to build the foundation of a new global economic order
on which the structure of a one-world economic and market
system will be built.

* www.asianpaints.com and Ramaswamv and Namakumari. Marketing Management. Macmilian India

Limited, New Delhi, 2004

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Whether or not a U.S. company wants to participate directly

in international business, it cannot escape the effect of the ever-
increasing number of American firms exporting, importing, and/or
manufacturing abroad; the number of foreign based firms
operating in U.S. markets; the growth of regional trade areas; the
rapid growth of world markets; and the increasing number of
competitors for global markets.

Of all the trends affecting global business today, three stand

out as the most dynamic, the ones that will influence the shape of
international business in the future:(the rapid growth of regional
free trade area such as NAFTA,EC, and AFTA; (2)the trend
towards the acceptance of the free market system among
developing countries in Latin America, Asia, and Eastern Europe;
and (3)from these two, the evolution of large emerging markets
such as Argentina, China, South Korea and Poland.

Today most business activities are global in scope. Finance,

technology, research, capital and investment flows, production-
facilities, and marketing and distribution networks all have global
dimensions. Every business must be prepared to compete in an
increasingly interdependent global economic environment, and all
business people must be aware of the effects of these trends when
managing a multinational conglomerate or a domestic company

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that exports. As one international expert noted, “every American

company is international, at least to the extent that its business
performance is conditioned in part by events that occur abroad.”
Even companies that do not operate in the international arena are
affected to some degree by the success of the European
Community, the export- led growth in South Korea, the revitalized
Mexican economy, and the economic changes taking place in
China.

It is less and less possible for business to avoid the influence

of the internationalization of the United States Economy, the
globalization of the world’s markets, and the growth of new
emerging markets. As competition for world markets intensifies,
the number of companies operating solely in domestic markets
will decrease. Or, to put it another way, it is increasingly true
that the business of American business is international business.
The challenge of international marketing is to develop strategic
plans that are competitive in the intensifying global markets.®

OSXOCZZOOSlfOCZHO

® www.asianpains.com

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